Austin Engineering flags further M&A

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Austin Engineering says it has a base for a 'world class' mining bucket business with its Mainetec acquisition
‘We expect acquisitions will be able to be funded internally’

Australian mining equipment maker Austin Engineering says its acquisition of Mainetec can add a “world class mining bucket business” to the dump-truck tray arm that underpinned a 43% year-on-year revenue increase to A$114.1 million in the first half of FY23.

ASX-listed Austin said improved trading terms and cash flow allowed it to cut debt following its $19.6m first-half acquisition of the circa-$40 million-a-year Mainetec business, leaving it with net debt of $4.6m at the end of December and prospects of moving to a net cash position in the current half.

CEO David Singleton said with significant concurrent investment in manufacturing capacity and renewal now largely behind Austin, the company saw potential for new acquisitions “as a way of building our capability and footprint around the world post the developing success of Mainetec”.

“The board has decided to suspend the dividend in this half to support growth through potential acquisitions,” he said.

“We expect acquisitions will be able to be funded internally given the strength of our cashflows and balance sheet.

“This change will be reviewed in the second half following any potential outcomes.”

Singleton said with production capacity at existing Australian centres “fully loaded well into this calendar year”, Austin was developing a new bucket production cell in Indonesia.

“The acquisition of Mainetec is galvanising our strategy to build a world class mining bucket business,” he said.

“The product complementarity of Mainetec’s equipment with Austin’s has meant we have become more competitive in this product area with good growth potential.”

Dump truck trays (68%) and buckets account for 73% of Austin’s revenues, with maintenance and repair services generating the balance. It estimates that it has about 18% of the global mining truck tray market. About 73% of its total business is in North and South America.

The company’s FY23 H1 net profit after tax was A$5.4m, up 3% yoy, while EBITDA climbed 22% yoy to $12.2m.

Singleton said the second half of FY23 had started strongly with $28m of revenue and $6.2m EBITDA recorded for January. Austin’s $158.5m order book covered its full-year revenue guidance.

“We have seen a sustained surge in the order book, which has been up between 40% and 74% all year and is now reflected in revenue, which was up 43% in the first half and growing into the second half,” Singleton said.

“We recognised that this growth needed us to invest in increasing capacity in Indonesia, Australia and Chile much of which is now ready for the second half.”

Austin has been paying 5c-a-share in annual dividends, including a 2c-a-share interim payout – now suspended for the current half.

Its share price dipped 4% early today, having risen about 20% year-to-date, capitalising the company at A$210m.


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